BYD's profits from plug-in electric car sales quickly evaporate with China's new limited incentives.
In fact, there are several problems culminating in China, as on top of overall passenger car sales decreasing for the 15th consecutive month in September, subsidies for plug-ins were decreased. The third thing is increasing competition as on one hand, major manufacturers are finally introducing their first plug-in models, while on the other hand startups are scrambling to launch products and basically survive.
BYD, the biggest plug-in electric car manufacturer in China, is in the middle of all this.
During the third quarter of 2019, BYD posted a net profit of 119.72 million yuan ($16.95 million), which is 88.6% lower than a year ago.
As the perspectives for the fourth quarter aren't looking any better, the full-year net profit forecast is between 1.58 billion yuan ($224 million) and 1.77 billion yuan ($251 million) - 43% drop year-over-year from 2.78 billion yuan. The good news is that there are still some net profits, so it could be worse.
"“As subsidies on new energy vehicles drop sharply, sales of new energy vehicles are falling short of expectations. It is expected that the profit of the company’s new energy vehicle business will also decline to a certain extent compared with the same period of last year,” BYD said in a stock exchange filing."
If the situation prolonges into 2020, many manufacturers will note losses.